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Merger Arbitrage Spread Formula

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Merger Arbitrage Spread refers to the difference between the price at which a merger or acquisition is expected to occur and the current trading price of the target company's stock. Check FAQs
MARS=RP+RFR
MARS - Merger Arbitrage Spread?RP - Risk Premium?RFR - Risk Free Rate?

Merger Arbitrage Spread Example

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With units
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Here is how the Merger Arbitrage Spread equation looks like with Values.

Here is how the Merger Arbitrage Spread equation looks like with Units.

Here is how the Merger Arbitrage Spread equation looks like.

254.08Edit=254Edit+0.08Edit
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HomeIcon Home » Category Financial » Category Mergers and Acquisitions » fx Merger Arbitrage Spread

Merger Arbitrage Spread Solution

Follow our step by step solution on how to calculate Merger Arbitrage Spread?

FIRST Step Consider the formula
MARS=RP+RFR
Next Step Substitute values of Variables
∴ MARS=254+0.08
Next Step Prepare to Evaluate
∴ MARS=254+0.08
LAST Step Evaluate
∴MARS=254.08

Merger Arbitrage Spread Formula Elements

Variables
Merger Arbitrage Spread
Merger Arbitrage Spread refers to the difference between the price at which a merger or acquisition is expected to occur and the current trading price of the target company's stock.
Symbol: MARS
Measurement: NAUnit: Unitless
Note: Value should be greater than 0.
Formulas to find Merger Arbitrage SpreadOpen Variable
Risk Premium
Risk Premium is the additional return or compensation that investors demand for holding a risky asset compared to a risk-free investment.
Symbol: RP
Measurement: NAUnit: Unitless
Note: Value should be greater than 0.
Formulas to find Risk PremiumOpen Variable
Risk Free Rate
Risk Free Rate is the theoretical rate of return of an investment with zero risk of financial loss, typically considered to be the return on government bonds.
Symbol: RFR
Measurement: NAUnit: Unitless
Note: Value should be greater than 0.
Formulas to find Risk Free RateOpen Variable

Other formulas in Mergers and Acquisitions category

​Go Accretion Amount
AA=((PB)⋅(YTMAPPY))-CI
​Go Takeover Premium
TPM=PT-VT
​Go Gain of Acquirer
GAQ=S-(PT-VT)
​Go Post Merger Value of Merged Company
PMV=PVA+VT+S-C

How to Evaluate Merger Arbitrage Spread?

Merger Arbitrage Spread evaluator uses Merger Arbitrage Spread = Risk Premium+Risk Free Rate to evaluate the Merger Arbitrage Spread, Merger Arbitrage Spread refers to the difference between the acquisition price of the shares and the market price at the time of investment. Merger Arbitrage Spread is denoted by MARS symbol.

How to evaluate Merger Arbitrage Spread using this online evaluator? To use this online evaluator for Merger Arbitrage Spread, enter Risk Premium (RP) & Risk Free Rate (RFR) and hit the calculate button.

FAQs on Merger Arbitrage Spread

What is the formula to find Merger Arbitrage Spread?
The formula of Merger Arbitrage Spread is expressed as Merger Arbitrage Spread = Risk Premium+Risk Free Rate. Here is an example- 254.08 = 254+0.08.
How to calculate Merger Arbitrage Spread?
With Risk Premium (RP) & Risk Free Rate (RFR) we can find Merger Arbitrage Spread using the formula - Merger Arbitrage Spread = Risk Premium+Risk Free Rate.
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